Thomson Reuters BPA Malaysia Weekly Bond Market Report Mar 25 2012

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The Thomson Reuters BPA Malaysia All Bond Index recorded losses for the second consecutive week as the index contracted slightly from 125.85 to 125.82.

The losses could be attributed to rising yields for ringgit sov­ereign bonds as yields rose one to five basis points (bps) across the board with the exception of the 20-year benchmark MGS paper which shed 4bp during the week.

Sovereign papers continued to dominate the top 10 most ac­tive bonds during the week.

The trading volume for this week shrunk as total traded volume of the top 10 most ac­tive bonds stood at only RM 11 billion compared with previous week’s total traded volume of RM16 billion.

Looking at new private debt securities (PDS) issuance during the week, on March 23, 2012, Tenaga Rapi Sdn Bhd issued RM 60 million worth of four-year and five-year bonds with coupon rates of three per cent each.

The bonds were assigned a rating of AA2 with a stable outlook by RAM Ratings on March 22, 2012.

Tenaga Rapi is a special-purpose company, which was established to acquire Pustaka Panglima (Malaysia) Sdn Bhd, which owns 100 per cent of Anjung Bahasa Sdn Bhd – a concessionaire for the design, construction and operation of an office complex for Dewan Bahasa dan Pustaka.

Meanwhile on rating actions, on March 20, 2012, MARC had downgraded the ratings of Max­tral Industry Bhd’s (Maxtral) RM80 million Al-Bai’ Bithaman Ajil Islamic Debt Securities (BaIDS) and RM20 million Mu­rabahah Underwritten Notes Issuance/Murabahah Medium Term Notes facilities to BBID and MARC-4ID/BBID from BBB-ID and MARC-4ID/BBB-ID respectively.

The downgrade reflected the breach by Maxtral in complying with its sinking fund account obligations, which was due in January 2012 and March 2012 to meet the redemption of RM20 million BaIDS in April 2012.

On 21 March 2012, MARC downgraded the ratings of KNM Group Bhd’s RM400 mil­lion Islamic Commercial Paper Programme/RM1.1 billion Islamic Medium Term Notes Programme and KNM Capital Sdn Bhd’s RM300 million Mu­rabahah Underwritten Notes Issuance Facility/Islamic Me­dium Term Notes Programme long-term ratings to A+ID from AA-ID, and revised the outlook of the ratings to developing from stable.

The rating downgrade re­flected KNM’s weak results in recent periods and continued challenging market conditions for the process equipment market.

The developing outlook that MARC attached to the ratings recognised the potential for KNM to stabilise and restore its financial position through rationalisation of its capacity and product portfolio as well as the possibility of negative rating action if the gains from rationalisation are insufficient to stabilise and improve KNM’s credit metrics.

The affirmation of the short-term ratings was based on its satisfactory liquidity position vis-a-vis ongoing short-term debt obligations.